8 Most Asked Questions about Legal Expenses and Rent Guarantee Insurance
Rentguard's Legal Expenses & Rent Guarantee Insurance has been developed to help cover legal costs that landlords might incur. This includes the legal costs for evicting a tenant due to rent default. Tenants’ circumstances can change overnight and rent guarantee protection can help to provide landlords with an extra cushion against unexpected situations.
No matter how reliable a tenant is, there may be periods when they are unable to keep up with their rental payments, perhaps because of illness or redundancy [1]. This is naturally concerning for landlords who have to cover the mortgage and other bills, even if they may be sympathetic to their tenants’ difficulties.
In other circumstances, a landlord might be left with no choice but to evict a tenant, perhaps because of months of unpaid rent arrears. Having legal expenses and rent guarantee cover can help with the financial burden should you face an eviction situation and have to recoup lost rent money.
As well as offering cover to landlords for tenant rent arrears, Legal Expenses & Rent Guarantee Insurance can also offer mediation services to help reconcile disputes if needed.
To help explain how such protection can be useful to landlords, we’ve answered eight of the most asked questions we receive about this insurance.
Please note that these Frequently Asked Questions are not a substitute for the policy wording. For full terms and conditions, please see the policy documentation.
1. What is the maximum amount of rent covered per month?
The maximum monthly rent covered is £2,500 for a period of up to six months or the end of the policy term, whichever is lesser. Please also note, there is no rent covered beyond the end of the term of the tenancy agreement. Rentguard can insure properties where the rent exceeds £2,500 a month, but if a landlord makes a successful claim they will receive the maximum of £2,500 and they must cover the rest.
2. What first steps should be taken if a tenant defaults on rent?
You must report all claims as soon as possible within 45 days of the insured event by completing and submitting the claim form with all relevant information.
If rent is overdue, the tenant and guarantor must be contacted within seven days to establish the reason for late payment. If the rent is not paid within a further seven days, then they must both be contacted again. If the tenant or guarantor cannot be contacted, and it is lawful to do so, you must serve notice of an inspection in accordance with your rights within the tenancy agreement. Inspections are subject to strict criteria. Landlords must, in accordance with the Housing Act 1988 [2], notify tenants in writing at least 24 hours before they wish to enter your home.
Standard tenancy agreements state that the landlord should visit only at “reasonable times of the day” and tenants must give their permission for you to enter. You should seek legal advice if you are unsure whether an inspection is lawful.
3. Is there an excess to pay when making a claim?
This policy has nil excess for both tenant eviction and rent protection cover.
4. Can a policy be taken out mid-tenancy agreement?
Yes, a policy can be taken out at any point during the tenancy. However, there is a 90 day exclusion period, meaning that the policyholder cannot make a claim for any risk events that occurred during the first 90 days from the start date of the policy. Any risk events that occurred before the start of the policy would also not be covered by this insurance.
5. Is tenant referencing a requirement of the policy?
Tenant referencing is a requirement for this type of insurance. The referencing must cover all tenants and guarantors named on the tenancy agreement.
For a full list of information about what tenant referencing involves, view the NRLA’s Tenant Referencing page.
6. Is a tenancy deposit needed to take out this policy?
Yes, collecting a deposit from the tenant is one of the conditions of the policy. A minimum amount equal to one month’s rent must be retained as the deposit. Deposit replacement insurance may be purchased in lieu of a deposit, however this must meet or exceed the minimum sum above.7. Can this cover be taken out if the property is let as a house in multiple occupation (HMO)?
Rentguard policies are valid for up to five tenants on one tenancy agreement. However, if you would rather have separate tenancy agreements for each tenant, you will need to take out five separate policies with Rentguard.
8. Can this cover be taken out if the property is let to family or friends and there is no tenancy agreement?
No, a tenancy agreement must be in place for the policy to be valid. It must also be directly signed between the tenant and the landlord.
The tenancy agreement must be for a fixed term of no more than 12 months or if longer, must contain a break clause allowing both parties to terminate the tenancy after the first 12 months.
For full terms and conditions about our policy, please see our policy wording.
[1] https://www.rentguardtenantref.co.uk/rentlegal.aspx
[2] https://www.legislation.gov.uk/ukpga/1988/50/contents
8 Most Asked Questions about Legal Expenses and Rent Guarantee Insurance
Last updated: 25/10/2022 at 10:29 - 803.26 KB
If you have any other questions about our Legal Expenses & Rent Guarantee Insurance, get in touch with our specialist team on 0333 000 0169.
You can visit our product page for more information about our Legal Expenses & Rent Guarantee Insurance - www.nrla.org.uk/services/insurance/legal-expenses-rent-guarantee.
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The sole purpose of this article is to provide information on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Rentguard and National Residential Landlords Association, an Introducer Appointed Representative of Arthur J. Gallagher Insurance Brokers Limited, accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.
National Residential Landlords Association is an Introducer Appointed Representative of Arthur J. Gallagher Insurance Brokers Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 7th Floor, 55 Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909. Rentguard is a trading name of Arthur J. Gallagher Insurance Brokers Limited.
